d. If the employees are not covered, what is the maximum amount Ken can contribute for himself?Only 25% of employee earningsLesser of $61,000 or 25% of employee earningsGreater of $61,000 or 25% of employee earningsOnly 25% of employee earningsOnly $61,000e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amountKen can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.Maximum contribution$0 Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom haveworked for Ken full-time for the last four years. The office assistant earns $33,600 per year and each drafter earns $43,600. Ken's netearnings from self-employment (after deducting all expenses and one-half of self-employment taxes) are $353,600. Ken is consideringwhether to establish a SEP plan and has a few questions. Assume that all the employees are at least 21 years old.Required:a. Is he eligible to establish a SEP plan?Yesb. Is he required to cover his employees under the plan?Yes

SEP plan: An employer or self-employed person can open an individual retirement account (IRA) known…

d. If the employees are not covered, what is the maximum amount Ken can contribute for himself? Only 25% of employee earnings ......... Lesser of $61,000 or 25% of employee earnings Greater of $61,000 or 25% of employee earnings Only 25% of employee earnings Only $61,000 e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.

d. If the employees are not covered, what is the maximum amount Ken can contribute for himself? Only 25% of employee earnings ......... Lesser of $61,000 or 25% of employee earnings Greater of $61,000 or 25% of employee earnings Only 25% of employee earnings Only $61,000 e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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